Global investors eye office, industrial and logistics real estate in Asia this year

By Timothy Tay

/ EdgeProp |

January 17, 2019 8:00 AM SGT

More than half (56.7%) of surveyed institutional investors and fund managers say that they will increase their investments into Asia Pacific real estate over the next two years, according to the latest Investment Intentions Survey. Jointly organised by the Pension Real Estate Association, as well as the Asian and European Associations for Investors in Non-Listed Real Estate Vehicles, the survey attracted 154 respondents from Europe, North America, and the Asia Pacific.

European investors are leading the charge to invest in Asia Pacific real estate, with 69% indicating they will increase their real estate investments in the region over the next two years, compared to 50% of surveyed US investors. Asia Pacific investors are also more optimistic and 40.7% of these respondents say they also plan to increase their allocations, but most prefer to invest in the US and Europe.

Pictures: Asian Association for Investors in Non-Listed Real Estate Vehicles

This comes on the back of a more bullish stance toward real estate, as more than US$72.7 billion ($98.47 billion) worth of new capital is expected to be invested into the sector this year, compared to US$53.8 billion designated last year. Many investors cited diversification and enhanced returns as the main benefits that attracted them to these assets.

Sydney, Melbourne, and Tokyo remain top investment destinations for surveyed global investors. However, compared to their US and European counterparts, fewer Asian investors favoured Australia’s top two cities and only 50% of them expect to invest in Tokyo, compared to 83.3% and 75% of European and US investors. Seoul is also emerging as a top investment destination, with 38.9% of respondents stating they will invest in the city, up from 31.6% last year.

This year, all of the surveyed investors say they would be investing in Asia Pacific’s office sectors, followed by 80.6% who say they would invest in industrial and logistics real estate, and 63.9% say they would invest in the retail segment. Interest in healthcare real estate investments grew from 10.5% to 16.7% of total survey respondents.

For the first time, Melbourne’s office sector beat out Sydney’s office sector to take the top spot this year. Tokyo’s office sector climbed to fourth spot after falling to seventh place last year, and half of the investors say they will invest in this market this year.

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